Michigan's Medical Marihuana Law - City Commission and Planning Commission Joint Work Session February 7, 2017 As Prepared by Richard A. Racht ...
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Michigan’s Medical Marihuana Law City Commission and Planning Commission Joint Work Session February 7, 2017 As Prepared by Richard A. Racht
Overview of Federal Regulation of Marijuana • Marijuana is a Schedule 1 restricted drug under the regulatory authority of the US Drug Enforcement Administration ( DEA). • The Federal Controlled Substances Act (CSA) of 1970 prohibits the “use, manufacture or cultivation” of marijuana. • In August 2016, the DEA rejected a petition to reclassify marijuana out of Schedule 1. • The FDA warned eight companies to stop making claims about the medicinal benefits of products that include compounds in marijuana. • Legislation introduced at the federal level to remove marijuana from federal regulation did not pass.
Summary of the New Medical Marijuana Acts in Michigan • Medical Marihuana Facilities Licensing Act - PA 281 of 2016 • Marihuana Tracking Act – PA 282 of 2016 • Medical Marihuana Act Amendment – PA 283 of 2016
Medical Marihuana Facilities Licensing Act PA 281 of 2016 • DOES NOT LEGALIZE MARIJUANA – Licensees, registered qualifying patients and registered primary caregivers will receive specified protection from marijuana-related criminal or civil prosecutions IF THEY ARE IN COMPLIANCE with the Acts. • Purpose – Legislature finds that the necessity for access to safe sources of marijuana for medical use and the immediate need for growers, processors, secure transporters, provisioning centers, and safety compliance facilities to operate under clear requirements establish the need to promulgate emergency rules to preserve the public health, safety, or welfare. • Creates Medical Marihuana Licensing Board within LARA • A five member board appointed by the governor in accordance with the act; • Grants the board general responsibility for administering, implementing and enforcing the act. • Creates Marihuana Advisory Panel • A 17 member majihuana advisory panel within LARA to make recommendations to the LARA MML board regarding its duties.
MUNICIPAL CONTROL AND ZONING • Prohibits a marihuana facility in a municipality that has not adopted an ordinance authorizing that facility type. • Allows a municipality to do the following: • Adopt an ordinance authorizing 1 or more facility types; • Limiting the number of each type of license allowed in your municipality; and • Establishing an annual license fee not exceeding $5,000 to help defray associated administrative and enforcements costs. Fee to be commensurate with costs of enforcement. Track your costs in order to justify the fee. • Allows a municipality to adopt other ordinances relating to marihuana facilities, including zoning, that do not regulate marihuana purity or pricing or conflict with statutory regulations for marihuana facility licensing. • Authorizes growers only in areas zoned for industrial or agricultural uses. • SPECIAL LAND USE
MUNICIPAL CONTROL AND ZONING (cont’d) • Requires license applicants to provide the Board with a copy or website posting reference for the municipal ordinance or zoning regulations. • Requires license applicants to give notice of the application to the municipality by registered mail within 10 days of the application. • Within 90 days after a municipality receives notification from an applicant of a license application, the municipalities must provide all of the following to the Licensing Board: • A copy of the local ordinance authorizing the marijuana facility and of the zoning regulations that apply to the proposed facility. • A description of any violation of the local ordinance or zoning regulation described above committed by the applicant BUT only if the violations relate to activities licensed under the act or the MMMA.
Creates Five (5) License Categories 1. Grower: • CLASS A – Maximum of 500 plants. • CLASS B – Maximum of 1,000 plants. • CLASS C – Maximum of 1,500 plants. 2. Processor – Edibles “food” / Topical Treatments/ Beverages, etc. 3. Provisioning Center – Retail or “Dispensaries” 4. Secure Transporter. 5. Safety Compliance Facility – Testing
Grower License - Commercial Growers operate in an area zoned for industrial or agricultural uses or in an area that is unzoned and authorized by a municipal ordinance. Cultivates, dries, trims, cures and packages Marihuana. • Sales of marijuana seeds or plants ONLY to another grower by means of a secure transporter. • Sales of marijuana, other than seeds, can be made ONLY to a processor or provisioning center by a secure transporter. • The license applicant and each investor in the grower must NOT have an interest in a secure transporter or a safety compliance facility. • Until 12/31/2021 have a minimum of 2 years’ experience as a registered primary caregiver or have an active employee with that experience. • Not be registered as a primary caregiver and not employ an individual who is a registered primary caregiver. • Enter ALL transactions, current inventory and other information into the statewide monitoring system as required by the Act, rules and the Tracking Act.
PROCESSOR LICENSE – Commercial • Extracts resin from marihuana or creates marihuana infused products for sale and transfer in packaged form to provisioning centers. • Authorizes purchase of marihuana only from a grower and sale of marihuana infused products only to a provisioning center. A processor only transports via a secure transporter. • No interest in a secure transporter or safety compliance facility • Until 12/31/2021 have a minimum of 2 years’ experience as a registered primary caregiver or have an active employee with such experience. • Not be a registered primary caregiver and not employ a registered caregiver. • Enter ALL transactions, current inventory and other information into the statewide monitoring system as required by the Act, rules and the Tracking Act.
PROVISIONING CENTER LICENSE-Retail Commercial Entity • Authorizes the purchase and transfer of marihuana ONLY from a grower or processor, and sale and transfer to only a registered qualifying patient or registered primary caregiver. • All transfers of marihuana to a provisioning center from a separate marihuana facility must be by means of a secure transporter. • Authorizes the transfer of marihuana to or from a safety compliance facility for testing by means of a secure transporter. • Applicant and each investor must not have an interest in a secure transporter or safety compliance facility for testing by means of a secure transporter. • Sell or transfer to a patient or caregiver ONLY after is has been tested and bears the label required for retail sale. • A noncommercial location used by a primary caregiver to assist a qualifying patient connected to the caregiver through the Department’s marihuana process IS NOT a provisioning center.
PROVISIONING CENTER (cont’d) • Enter all transactions, current inventory, and other information into the statewide monitoring system as required in the tracking Act. • A check of the statewide monitoring system before selling or transferring marihuana to a patient or caregiver on behalf of a patient to deterine whether the patient and, if applicable, the caregiver hold a valid, current, unexpired and unrevoked registry identification card AND that the sale or transfer will not exceed the daily purchasing limit established by the Board. • Prohibit alcoholic beverages from being sold, consumed, or used on the premises. • Prohibit a physician from conducting a medical examination or issuing a medical certification document on the premises for the registry identification care purposes.
SECURE TRANSPORTER LICENSE - Commercial • Stores and transports marihuana and money associated with the purchase or sale of marihuana between facilities for a fee upon request of a person with legal custody of marihuana or money. • DOES NOT authorize transport to a patient or caregiver. • Michigan Chauffer’s license • Each employee must not be convicted of or released from incarceration for a felony under Michigan, federal or other state’s laws within the past 5 years or convicted of a misdemeanor involving a controlled substance within the past 5 years. • 2 person crews are required to operate each vehicle, with one remaining in vehicle at all times • Route plan and manifest must be entered into statewide monitoring system and a copy carried and presented to law enforcement upon request • Transported in one or more sealed containers and not accessible while in transit. • Unmarked or have other indications it is carrying marihuana or a marihuana -infused product.
SAFETY COMPLIANCE FACILITY LICENSE • Authorizes the transfer and testing of marihuana from a caregiver as authorized under the act. • Authorizes the facility to receive marihuana from, test it for, and return it to only to the same marihuana facility where it originated. • Must be accredited by an entity approved by the Board by one year after the date the license is issued or that had previously provided drug testing services to the state or the state court system, and be a vendor in good standing in regard to those services. • May grant a variance from this requirement upon a finding that the variance is necessary to protect and preserve the public health, safety or welfare.
SAFETY COMPLIANCE FACILITY (cont’d) • Applicant and each investor in the facility must not have an interest in a grower, secure transporter, processor or provisioning center, • Must perform tests to certify that marihuana is reasonable free of chemical residues such as fungicides and insecticides. • Use validated test methods to determine levels of tetrahydrocannabinol (THC), THC acid, cannabidiol and cannabidiol acid. • Perform tests that determine whether the marihuana complies with the standards established by LARA for microbial and mycotoxin contents. • Perform other test necessary to determine compliance with any other good manufacturing practices as prescribed in rules. • Enter all transactions, current inventory, and other information into the statewide monitoring system as required under the act, rules and the Tracking Act. • Have a secured laboratory space that cannot be accesses by the general public. • Retain and employ at least one staff member with a relevant advanced degree in meical or laboratory science.
LICENSING APPLICATIONS State Licensing – Authorizes applications for state operating licenses beginning December 15, 2017. Application must contain: • Type of facility • Certain criminal history • Financial information • Projected or actual gross receipts • Any past commercial license sanctions • Identity of every person having any ownership interest in the applicant • Notify the facility that the applicant has applied for a state operator’s license by REGISTERED mail within 10 days after the application was submitted, • Passport quality photo and set of fingerprints for having any ownership interest in the facility and each person who is an officer, director or managerial employee of applicant. • Provide written consent to inspections, examinations, searches and seizures as authorized in the act • Disclosure to the Board of otherwise confidential records, (fed and state and local tax records credit bureau or financial institution records). • Until June 30, 2018 a 2-year residency requirement is imposed on applicants.
DISQUALIFICATIONS FROM LICENSING (mandatory) • Convicted of or released from incarceration for a felony under federal, Michigan or other state laws within the past 10 years, or convicted of a controlled substance related felony within the past 10 years. • Convicted of a misdemeanor within that past 5 years involving a controlled substance, theft, dishonesty, or fraud or responsible for violating a local ordinance in any state for any of those offense’s that substantially corresponds to a misdemeanor in that state. • Knowingly submitting an application containing false information • Being a member of the Board. • Failure to demonstrate ability to maintain adequate premises liability and casualty insurance for the proposed marijuana facility. • Certain public employment or holding an elective office • Until after June 30, 2018, having less than a continuous 2-year period of residency in the state immediately preceding the date of filing the application. • A local ordinance has not been adopted to approve the type of facility for which the licensure is sought. • Failure by the applicant to meet other criteria established by rule.
Considerations For Board to Consider • Moral character • Integrity • Reputation • Ability to purchase and maintain required types and level of insurance • Sources and total amount of capitalization to operate and maintain the proposed facility • Criminal history of relevant offenses, including arrests, charges, expungements, pardons or reversals of convictions • Bankruptcy filings within the past 7 years • History of delinquent taxes • Noncompliance with regulatory requirements in any jurisdiction • Does the applicant meet other standards in rules applicable to the license category?
Licensing (cont’d) • A state operating license is a REVOCABLE PRIVILEGE!! This is NOT A PROPERTY RIGHT. Granting a LICENSE DOES NOT create, bestow or vest any right, title, franchise or other property interest. • A licensee cannot sell or transfer the license without first having that other person apply for and receive the Board and the municipality’s approval. • A licensee cannot lease, pledge or borrow or loan money against a license.
Licensing (cont’d) INSURANCE • Requires a licensee and applicants to obtain liability insurance in the amount of $100,000. • Before a license is granted or renewed, the licensee or applicant must file with LARA proof of financial responsibility for liability for bodily injury to lawful users resulting from the manufacture, distribution, transportation or sale of adulterated marijuana or adulterated marijuana-infused products in an amount not less than $100,000. • Licensee cannot cancel the liability insurance without first giving 30 days’ prior written notice to LARA and procuring new proof of financial responsibility and delivering that proof to LARA within 30 days after giving notice of the impending cancellation of the other policy.
Licensing (cont’d) RENEWAL of License • Annually. • Board will be required to renew if licensee meets are the following requirements: • The application is made on a form provided by the Board. • Received before the expiration date of the current license. • Assessment is paid. • Licensee meets the act’s requirements and any other renewal requirements set forth in rules.
Licensing (cont’d) SANCTIONS/CIVIL FINES FOR VIOLATIONS • For a transfer, sale or other conveyance of an interest of more than one percent without prior approval – suspension or revocation or other sanction considered by the board to be appropriate • Attempted transfer, sale or other conveyance… • Failure by licensee or applicant to comply with the act or rules or the Tracking Act, failure to continue to meet eligibility requirements for a license or failure to provide information as requested – license denial, suspension, revocation or license restrictions. • Violation of the acts approving the allowed type and number of facilities, suspension, revocation, license restrictions and removal of a licensee or an employee • Civil fine up to $5,000 against an individual and up to $10,000 or an amount equal to the daily gross receipts, whichever is greater against a licensee….NOT a bar to investigation, arrest, charging or prosecution and is not grounds to suppress evidence in any criminal prosecution… • ADMINISTRATIVE PROCEDURES ACT with imposing a sanction or fine. Suspended without notice or hearing if the safety or health of patrons or employees is jeopardized by continuing the operation. • Prompt post-suspension hearing must be held to determine if suspension should remain in effect. • If does not make a satisfactory progress toward abating the hazard, the Board may revoke the license.
Licensing EMPLOYEES • A licensee MUST conduct a background check of a prospective employee before the person is hired. Written permission must be obtained from the Board before hiring a person who has a pending charge or conviction within the past 10 years for a controlled substance related felony. • Does not specify fingerprint or name-based background check.
REPORTING TO THE STATE • By 30 days after the end of each state fiscal year, each licensee MUST transit to the Board and to the MUNICIPALITY financial statements of the licensee’s total operations. • The financial statements must be reviewed by a state-licensed CPA in a manner and form prescribed by the Board. • The Board must submit a report to the governor and the chair of the legislative committees that govern related issues covering the previous year.
TAXES, FEES and FUNDING - A tax is to be imposed on each provisioning center at the rate of 3% of the provisioning center’s gross retail income. - Taxes remitted quarterly for the preceding calendar quarter to the Michigan Dept. of Treasury. - Medical Marihuana Excise Fund is created in the state treasury. Except for the license application fee, the annual regulatory assessment, and any local licensing fees, all money collected under the 3 percent tax described above and all other fees and charges imposed under this act must be deposited in the Fund. - All interest earnings from the Fund investments are credited to the Fund and money remaining in the Fund at the close of a fiscal year must remain in the Fund and not lapse to the General Fund.
ALLOCATION OF FUNDS • 25 percent to municipalities where the marihuana facilities are located, allocated in proportion to the number of facilities within the municipality. • 30 percent to the counties where the facilities are located, allocated in proportion to the number of facilities within the municipality. • 5 percent to counties exclusively to support county sheriffs; this would be in addition to and not a replacement for any other funding received by the county sheriffs.
ALLOCATION OF FUNDS (cont’d) • 30 percent to the state for the following: • Until September 30, 2017, for deposit in the General Fund. • Beginning October 1, 2017, for deposit in the First Responder Presumed Coverage Fund created in Section 405 of the Worker’s Disability Compensation Act. • 5 percent to the Michigan Commission on Law Enforcement Standards for training local law enforcement officers. • 5 percent to the Department of State Police.
REGULATORY ASSESSMENT • A regulatory assessment is to be imposed on certain licenses. All of the following must be included in establishing the assessments under this provision. • LARA’s costs to implement, administer and enforce the act. • Expenses of related legal services provided by the attorney general. • Expenses of related services provided by the MSP. • Expenses of related services provided by the Dept. of Treasury. • $500,000 to be allocated to LARA for licensing substance use disorder programs. • An amount equal to 5 percent of the sum of the amounts provided under the above allocations to be allocated to the DHHS use disorder prevention, education and treatment programs. • Expenses related to the standardized field sobriety tests administered in enforcing the Michigan Motor Vehicle Code. • An amount sufficient to provide the administrative costs of the Michigan Commission on Law Enforcement Standards.
REGULATORY ASSESSMENT (cont’d) • This assessment is in addition to the initial application fees, the 3% excise tax on provisioning centers and any local licensing fees. • Collected annually from licensed growers, processors, provisioning centers and secure transporters. • The regulatory assessment for a Class A grower license could not exceed $10,000. • LARA is required to establish the total regulatory assessment at an amount that is estimated to be sufficient to cover the actual costs and support the expenditures listed above.
REGULATORY ASSESSMENT (cont’d) • Before the date a licensee begins operating and annually thereafter, each grower, processor, provisioning center and secure transporter MUST pay to the State Treasurer an amount determined by LARA to reasonable reflect the licensee’s share of the total regulatory assessment established in the preceding provision. • Presumably this means that larger businesses bear the greater burden of the regulator assessment since they may require more oversight than a smaller operation.
MARIHUANA REGULATORY FUND • Created by the State Treasury with LARA as the administrator for auditing purposes. • Revenue collected under the annual regulatory assessment and the initial license application must be deposited in the MRF. • Fund interest and earnings from investments are to be credited to the MRF. • Used only for implementing, administering and enforcing the act.
Medical Marihuana Tracking Act – PA 282 of 2016 • Requires LARA to establish a statewide internet based system to verify medical marijuana registry ID cards, monitor MMMA limits and track marihuana and marihuana products in commercial trade. • Makes it available to the state, law enforcement, and licensees as authorized to administer, enforce, or comply with the MMMA and Medical Marihuana Licensing Act. • Requires interface with third-party inventory and tracking systems mandatory for licensees. • Exempts the system from FOIA.
Medical Marihuana Tracking Act (cont’d) • Tracking ALL plants, products, packages, patient and primary caregiver purchase totals, waste, transfers, conversions, sales, and returns that, if practicable, are linked to unique ID numbers. • Tracking lot and batch information, as well as all products, conversions, and derivatives, throughout the entire chain of custody.
Medical Marihuana Tracking Act (cont’d) • Tracking plant, batch and product destruction. • Tracking transportation of product. • Tracking patient purchase limits and flagging purchases in excess of authorized limits. • Receving testing results electronically from safety compliance facility.
Medical Marihuana Tracking Act (cont’d) • Providing real-time access to information in the database to the State, local law enforcement agencies, and state agencies. • Providing the State with real-time analytics regarding key performance indicators such as total daily sales, total plants in production, total plants destroyed, and total inventory adjustments.
Medical Marihuana Tracking Act (cont’d) • Licensees MUST supply LARA with all relevant tracking or testing information regarding each plant, product, package, batch, test, transfer, or conversion, dale, recall or disposition of marihuana in or from the licensee’s possession or control. • A provisioning center is required to inculde information identifying the patient to whom or for whom the sale was made and, if applicablem the primary caregiver to whom the sale was made. • Submissions can be required electronically.
Medical Marihuana Tracking Act (cont’d) • Penalties • A licensee who willfully violates the reporting requirements is responsible for a state civil infraction and could be ordered to pay a civil fine or not more than $1,000.00. • A second or subsequent willful violation is a misdemeanor punishable by imprisonment for not more than 93 days or a fine of not more than $2,500, or BOTH.
Medical Marihuana Tracking Act (cont’d) Confidentiality - The information in the system established by LARA is confidential and not subject to disclosure under FOIA. - However, information could be disclosed in order to enforce the MMMA and the MMFLA.
Michigan Medical Marihuana Act Amendment PA 283 of 2016 • Overview: • Amends the MMMA to regulate manufacturing and transporting of marijuana infused products. • Definitions: • defines “marihuana-infused product; • defines “usable marihuana equivalent; • Adds plant resin and extract to definition of usable marihuana; • Defines “marihuana plant” and “plant”; • Immunity: • Amends and adds immunity provisions and prohibits certain transportation activities of qualifying patients and/or primary caregivers.
MMMA Amendments (cont’d) Goal of Act and Retroactivity • Claifies ambiguities in the law in accordance with the original intent of the people as expressed in Section 2(b) of the MMA. • The bill is curative and applies retroactively in some instances.
MMMA Amendments (cont’d) Retroactively as to: - Clarifies quantities and forms of marijuana for which a person is protected from arrest. - Precluding an interpretation of “weight” as aggregate weight. - Excluding an added inactive substrate component of a preparation in determining the amount of marihuana, medical marihuana, or usable marihuana that constitutes an offense.
MMMA Amendments (cont’d) Definitions - Marihuana plant: any plant of the species Cannabis sativa L. - Changes the terms “medical use” and use of medical marihuana” to “medical use of marihuana” and revises the definition of “medical use” to include the extraction of marihuana and marihuana-infused products.
MMMA Amendments (cont’d) Definitions: - Revises the definition of “USABLE MARIHUANA” to include, in addition to dried leaves and flowers, the plant resin or extract of the marihuana plant. The term does not include the seeds, stalks, or roots of the plant. - “Marihuana-infused product” means a topical formulation, tincture, beverage, edible substance, or similar product containing any usable marijuana that is intended for human consumption in a manner other than smoke inhalation. They are NOT considered a food under the applicable food laws.
MMMA Amendments (cont’d) Definitions - “Usable marihuana equivalent” is the amount of usable marihuana in a marihuana-infused product as calculated under the bill.
MMMA Amendments (cont’d) Pre-Patient Possession Limit: In order to qualify for protection from arrest, prosecution, or penaly for possession marihuana, the MMMA sets a possession limit of 2.5 ounces of marihuana-per-patient. Combined total of both “usable marihuana equivalents” and “usable marihuana” must be considered when determining if the per-patient possession limit is or is not exceeded.
MMMA Amendments (cont’d) In determining usable marihuana equivalency, one ounce of usable marihuana is considered equivalent to: 1. 16 ounces of marihuana-infused product if in a solid form. 2. 7 grams if in a gaseous form. 3. 36 fluid ounces if in a liquid form.
Marihuana-Infused Product • THE MMMA provides criminal, civil and administrative protections for certain conduct related to medical marihuana. • The MMMA adds similar protections to a registered qualifying patient manufacturing marihuana-infused product for PERSONAL USE, or a registered primary caregiver manufacturing for the use of the patient. • They will not be subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including but not limited to, civil penalty or disciplinary action by a business or occupational or professional licensing board or bureau.
MMMA Amendments (cont’d) • Immunity for Transferring, Purchasing or selling to licensees Patients and Caregivers immune from: - Transferring or purchasing marihuana in an amount authorized by the MMMA from a provisioning center licensed under the MMFLA. - Transferring or selling marihuana seeds or seedlings to a grower licensed under the MMFLA. - Transferring marihuana for testing to and from a safety compliance facility licensed under the MMFLA.
Transporting or Possession Marihuana- Infused Product in a motor vehicle • A patient to caregiver is prohibited from transporting or possessing a marihuana-infused product in or upon a motor vehicle EXCEPT as follows: -For a qualifying patient: + the product is in a sealed and labeled package carried in the trunk of the vehicle (or if there is no trunk, carried so as not to be readily accessible from the interior of the vehicle). + Label must state weight of infused product in ounces, name of manufacturer, date of manufacture, name of person product received, date of receipt.
For a Primary Caregiver • Product accompanied by an accurate marihuana transportation manifest and enclosed in a care carried in the trunk of the vehicle (or if no trunk, carried so as not to be readily accessible from the interior). • Manifest must state the weight of each infused product in ounces, name and address of manufacturer, date of manufacture, destination name and address, date and time of departure, estimated date and time of arrival, and, if applicable, name and address of the person from whom the product was received and date of receipt.
For a primary caregiver, if patient is his or her child, spouse, or parent: - The product is in a sealed and labeled package carried in the trunk of the vehicle (or if there is no trunk, carried so as not to be readily accessible from the interior of the vehicle). - Label must state weight of infused product in ounces, name of manufacturer, date of manufacture, name of person product received, date of receipt.
FINANCIAL IMPACT OF MEDICAL MARIHUANA • LARA estimates that ongoing costs resulting from these 3 bills will total approximately $21.1 million annually. • $726,000 in one-time information technology costs associated with establishing a statewide marihuana monitoring system. • It is possible that medical marihuana sales could be subjected to the State’s sales tax (IN THE FUTURE – NOT NOW), as only prescription drugs are exempted from the sales tax. • Projected that Michigan’s market is likely twice the size of Colorado’s market. This implies that the market in Michigan should be somewhere around $837 million. • Revenues from sales tax could thus be expected to be around $50 million
What action(s) can You Take? • Arguably the most important provision in the three new laws is Section 205 of PA 281: • “A marihuana facility shall not operate in a municipality unless the municipality has adopted an ordinance that authorizes that type of facility. A municipality may adopt an ordinance to authorize 1 or more types of marihuana facilities within its boundaries and to limit the number of each type of marihuana facility. A municipality may adopt other ordinances relating to marihuana facilities within its jurisdiction, including zoning regulations, but shall not impose regulations regarding the purity or pricing of marihuana or interfering or conflicting with statutory regulations for licensing marihuana facilities.” This provision allows municipalities to decide which medical marijuana facilities they want to allow, where, and in what number.
Yes or no? If YES, more questions must be answered: what to allow, where to allow what number to allow. If NO, medical marijuana facilities of any type will NOT be allowed under the existing state statutes in _____________.
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